Recommendations

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Health care industries provide a benefit to working families. With the advent of the Affordable Care Act, health insurance was made affordable and even free to millions of families across the country, removing a large cost for some and giving some care for the first time in years. While some states have yet to implement the expansion of Medicaid that would reach even more families, nearly every state has seen an increase in the number of individuals insured.

Invest in Industries that Offer a Pathway to Living Wages.

Investing in job growth in higher paying industries, like health care, is a way to boost workforce wages overall, while simultaneously generating social value through health care provided. One way states can do this is through Medicaid expansion.

When more individuals have access to health care coverage, it generates demand for services, which leads to job growth to support that demand. That growth would come in an industry largely comprised of living wage jobs. And, with more individuals with access to living wages, those workers can better contribute to the economy overall.

A July 2014 study by the White House Council of Economic Advisers found that the opportunity cost for the states11 that have chosen not to accept funding to expand Medicaid eligibility amounts to 103,100 jobs and nearly $14.7 billion in gross domestic product in 2016.12

Further, Medicaid expansion would benefit low-wage workers, reducing health care costs for many workers struggling to make ends meet. A December 2014 Families USA study found that, among states that have not expanded Medicaid eligibility, a majority of residents who stand to benefit from expansion are working adults.13

Increase Minimum Wages to Help Workers across All Industries.

In the November election, voters in blue states and in red, from San Francisco to Arkansas, overwhelmingly approved minimum wage increases. There is significant impetus to increase wage floors to a standard that equips families to rise from poverty.

While wage floors across the country are not keeping up with living needs, municipalities — like Chicago, Oakland, Seattle and Washington, D.C. — are taking action. Chicago’s city council recently approved a wage floor schedule that gets to $13 by 2019. And Oakland voters in November approved a $12.25 minimum wage by a landslide 81 percent vote. We are seeing progress at the city level, but, as states head into their legislative sessions, this is a critical moment for policymakers to address the living wage crisis.

At the federal level,  the Fair Minimum Wage Act, which Congress failed to pass in 2013, would have increased the federal wage floor for the first time since 2009 from $7.25 to $10.10 an hour. Although that falls short of providing enough to make basic ends meet, increasing the federal minimum wage and indexing it to inflation would lift millions of workers out of poverty.

This was also a failed opportunity for racial justice, as the increase would have lifted 3.5 million people of color out of poverty, according to Restaurant Opportunities Center United. 14

Eliminate the Tipped Minimum Wage.

While it has been six years since Congress last increased the federal minimum wage, it has been 24 years since Congress increased the subminimum wage known as the tipped credit.

According to federal law, workers who receive tips must be paid a minimum of $2.13 an hour. As a result, restaurant servers find themselves straddling the line of a minimum wage. The median wage — including tips — for waiters and waitresses in 2013 was just $8.94. Additionally, women and people of color are overrepresented in tipped work, and so are disproportionately affected by the subminimum wage.

Ultimately, there should not be a double standard when it comes to building reliable wage floors, and it should not be up to the kindness of strangers for servers to be able to cover living expenses.

Establish Work Supports, Like Paid Sick Days and Paid Maternity Leave.

Workers who do not make a living wage fall short of making ends meet with the wages they have. When these workers are forced to miss work because of sickness or a child’s birth, it has a significant impact on personal finances that are already stretched too thin.

Employers in Connecticut, the only state in the country with a statewide paid sick days law, have reported minimal impacts on pricing or employment levels as a result of the law that took effect in 2012, and, in fact, say it has increased employee productivity and morale. 15

Strengthen Federal and State Safety Net Programs and Work Supports.

In the absence of living wage jobs, strong federal and state safety nets can help workers provide for their families. Federal programs like Temporary Assistance for Needy Families (TANF) should be expanded to increased need and not have funding capped. Additionally, funding for safety net programs such as Medicare and the Supplemental Nutrition Assistance Program should be strengthened, not cut.

At the state level, supports like state-level Earned Income Tax Credits, child care assistance and tax credits, and state health care programs should be bolstered. And, states should make state-federal partnerships, such as TANF, more robust, and should accept federal funding for expanding Medicaid.

Until all workers earn enough for their families to make ends meet, such supports are of vital importance to ensuring that these families can get by.

Increase Federal and State Revenue.

A strong safety net requires enough revenue to support it. At the federal level, allowing taxes on high-income earners to increase to previously held levels will help inject revenue into the economy that can then support low-wage workers. A financial transaction tax can also help level the playing field by taxing certain large financial transactions and using that revenue to strengthen work supports.

Increasing revenue at the state level is also important for strengthening state-level programs. This can be done by evaluating and closing tax loopholes, making a state’s tax structure more progressive, and ensuring that surpluses are used to strengthen infrastructure and work supports.

To guarantee that both federal and state budgets balance, more must be done to ensure that corporations pay into the system. When corporations that pay workers low wages do not pay taxes, they are benefiting from a safety net system into which they do not contribute.

Conclusion

It’s a basic American value that if you work full-time, you will earn enough to make ends meet. However, we are observing a phenomenon in which families work long hours but still can’t pay their bills.

Half of all projected job openings nationally fall short of paying enough to let workers over their basic needs. Meanwhile there are seven times more job-seekers than there are living wage jobs. Employment realities are not meeting living needs.

With so few living wage jobs and so many individuals looking for work, we see an increasing shift to a chronically underpaid workforce that is lacking the means to make ends meet.

One way to address the living wage crisis is through public investments in industries with high job growth and strong wages — like health care. In the meantime,  increasing the minimum wage in all industries so workers are able to make ends meet would ease the crisis.

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